Middle-class home owners would pay higher taxes under radical plans outlined
by Vince Cable, the Liberal Democrat Business Secretary.

In a speech at his party's annual conference, Mr Cable called for the "tax base" to be shifted on to "property and land". He said it was far harder for people to dodge property taxes than income tax. The wealthy increasingly are moving their affairs offshore to avoid the new 50p rate on earnings.

Mr Cable expressed concern over the "extreme concentration of wealth" among those who own property. His comments will alarm middle-class home owners who have seen council tax bills double over the past decade.

George Osborne, the Chancellor, is likely to reject plans for higher property taxes and the Conservatives are already attempting to cap council tax bills. The speech is likely to add to the growing friction between the Business Secretary and Mr Osborne.

Mr Cable also used his speech to attack capitalism, the free market and bankers. He described City financiers as "spivs and gamblers" and said they posed more of a threat to Britain than Bob Crow, the militant trade unionist who has led recent transport strikes.

The Business Secretary said: "The biggest test of our party's contribution to the Coalition is whether we can ensure fairness more widely. It will be said that, in a world of internationally mobile capital and people, it is counterproductive to tax personal income and corporate profit to uncompetitive levels. That is right. But a progressive alternative is to shift the tax base to property and land which cannot run away and represent, in Britain, an extreme concentration of wealth."

Mr Cable added that he "personally regretted" that the Coalition had not backed the introduction of a mansion tax. This was a Liberal Democrat policy which would have levied a one per cent tax on the value of properties worth more than £2 million.

The speech was heavily criticised in the City and among business groups but was warmly welcomed by Liberal Democrat activists on the final day of the party's conference in Liverpool. Mr Cable described the corporate world as "murky" and said that markets were "often rigged". He refused to tone down the comments after previews of the speech caused outrage.

He said: "I make no apology for attacking spivs and gamblers who did more harm to the British economy than Bob Crow [the RMT union leader] could achieve in his wildest Trotskyite fantasies, while paying themselves outrageous bonuses underwritten by the taxpayer. There is much public anger about banks and it is well deserved."

He added: "The Government's agenda is not one of laissez-faire. Markets are often irrational or rigged. So I am shining a harsh light into the murky world of corporate behaviour.

"Why should good companies be destroyed by short term investors looking for a speculative killing, while their accomplices in the City make fat fees? Why do directors sometimes forget their wider duties when a cheque is waved before them?

"Capitalism takes no prisoners and kills competition where it can, as Adam Smith explained over 200 years ago."

In another move that is likely to anger the Conservatives Mr Cable boasted that he had forced David Cameron to drop his pre-election commitment to a new inheritance tax limit. The policy was one of the most popular Tory tax pledges.

To cheers from the Liberal Democrat delegates, Mr Cable said: "You'll remember our Conservative colleagues campaigned in the general election to lift the inheritance tax burden on double millionaires. But they have dropped that commitment.

"They have gone half way to accepting our case for equalising income tax and capital gains tax rates. They have accepted in the Coalition Agreement that the priority for cutting income tax is for low earners not top earners."

The Business Secretary also refused to back down in his determination for university graduates to pay a new levy to fund their degree courses.

He said: "In reality the only way to maintain high quality higher education with less government money is for the graduate beneficiaries to make a bigger contribution from the extra earnings they enjoy later in life.

"I am doing everything I can to ensure that graduate contributions are linked to earnings. Why should low paid graduates – nurses, youth workers or science researchers – pay the same as corporate lawyers and investment bankers."